The restructuring plan for Tokyo Electric Power Co. approved May 9 will trigger howls of protest from millions of customers, but government and company officials say the grim logic of the utility's predicament offers little alternative.
The pain for TEPCO's customers will be acute and immediate. The company's plan calls for a 10 percent increase in household electric rates from July, the first such increase in 32 years.
Yukio Edano, the industry minister, said the proposed 10.28 percent rate increase was only a starting point for discussions and that it might be revised.
There was never any suggestion that electric rates would not go up.
The industry ministry said it will take about three months to assess whether the cost estimates used by TEPCO to calculate the hike are appropriate. But one high-ranking ministry official cautioned: "It will be very difficult to shrink the figure by a large amount."
Under the plan, the average monthly electricity bill for households will increase by 6.9 percent from 6,973 yen ($87) to 7,453 yen.
TEPCO can expect a rocky ride over the next few months. It will have to hold public hearings to allow household users to have their say on the plan and listen to the opinions of the Consumer Affairs Agency. In an April news conference, Jin Matsubara, the state minister in charge of consumer affairs, said the understanding of consumers would only be obtained after the utility actually implemented cost cuts.
At a May 9 news conference, outgoing TEPCO President Toshio Nishizawa said the company was preparing a major public relations push: "We will use every method available, from pamphlets to our website. We will also visit consumers' groups to explain the situation."
One of the main reasons TEPCO users went more than three decades without an electricity rate increase was the company's investment in nuclear energy. The accident at the Fukushima No. 1 nuclear power plant has shifted public opinion against nuclear energy and, therefore, against the cheap electricity production that kept rates down.
But the other controversial point in TEPCO's special business plan is a clear intention to continue to rely on nuclear power. Specifically, the document stresses the importance of resuming operations at the seven reactors of its Kashiwazaki-Kariwa nuclear power plant.
At a news conference on May 9, Kazuhiko Shimokobe, who will take over as TEPCO chairman in June, said: "While resumption of operations is not a predetermined fact, any plan that does not include nuclear energy would be nothing more than a pie-in-the-sky blueprint."
In order to stave off TEPCO's bankruptcy, the central government will invest 1 trillion yen in the utility. The central government is also lending TEPCO 2.4 trillion yen through the Nuclear Damage Liability Facilitation Fund for compensation payments for the nuclear accident and, under the special business plan, TEPCO will have to repay the loan through the profits it generates.
A key part of the plan to achieve profitability is resuming operations from April 2013 of the reactors at Kashiwazaki-Kariwa. As each reactor comes back online, TEPCO will be able to reduce the fuel costs of its thermal power plants. Over the course of a year, the utility estimates fuel cost savings of about 78 billion yen.
Although Edano said the business plan was only provisional and would not directly lead to a resumption of reactor operations, the clear line from TEPCO is to stress the importance of nuclear energy in its future.
Nishizawa said on May 9: "If priority is placed on safety, nuclear energy has a certain amount of value. While we have no intention of shortchanging safety, there will also be a need to make a comprehensive judgment."
But, with many Fukushima residents still eking out an existence as evacuees, the company responsible for their misery is likely to meet fierce political resistance to restarting its nuclear plants.
Although TEPCO states in its business plan that it will work with the public at large to transform its energy business, there is almost no mention of a new strategy for generating electricity other than dependence on nuclear energy.
Even if TEPCO is able to survive the next few years, it must still deal with huge outlays for compensation related to the nuclear disaster as well as decades of costly decommissioning work at its Fukushima No. 1 nuclear power plant. Failure to resolve those problems could lead to bankruptcy or other legal proceedings.
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